2018 (5) TMI 1653 - HC - VAT and Sales Tax

Validity of SCN - time limitation - initiation of the proceeding by issuance of show cause notice - suo motu revision of original assessment order - whether the notices dated 14-7-2015 seeking to revise the original assessment orders dated 1-5-2009, 1-5-2010 and 22-1-2008, respectively was within the prescribed time period or not? - Held that - In the proviso (a) to sub-section (3) of Section 49 of the VAT Act an embargo has been created for the purpose that no proceeding initiating suo motu revision under Section 49 (3) shall be initiated after the expiry of three calendar years from the date of the order sought to be revised. Since the orders sought to be revised, as stated in the show cause notices, were passed on 1-5-2009, 1-5-2010 and 22-1-2008, they were clearly beyond the prescribed time period of three years. When once the period of limitation expires, the mandate against being subject to suo motu revision sets in and the right to embark upon and invoke Section 49 (3) get extinguished. The limitation has to be calculated from the date of assessment and not from the date of reassessment order, as the subject matter of show cause notices dated 14-7-2015 invoking suo motu revisional power under the VAT Act read with Section 13 of the Entry Tax Act, refers to the original order of assessment. The show cause notices dated 14-7-2015 for the provincial tax and entry tax for suo motu revision of original assessment order(s) passed on 1-5-2009, 1-5-2010 and 22-1-2008 were barred by limitation, as the same were issued after three calendar years, and is quashed - petition allowed.

Summary

Issues:
Challenge to revisional order under the Chhattisgarh Value Added Tax Act, 2005 for assessment years 2006-07, 2007-08 & 2008-09. Interpretation of Section 49(3) of the VAT Act regarding the timeline for passing orders. Legality of show cause notice issued after three years for revision of original assessment orders. Calculation of limitation period for suo motu revision under Section 49(3) of the VAT Act.

Analysis:

Issue 1: Challenge to Revisional Order
The assessee filed six writ appeals and three writ petitions challenging the revisional order imposing liability of VAT & Entry Tax for the mentioned assessment years. The argument was that the order should have been passed within one year from the date of the show cause notice, but it was passed beyond that period. The writ court held that the final order should be passed within one calendar year from the initiation of the proceeding, which was interpreted as starting from the first of January following the assessment period. The order was considered within the time limit as per Section 49(3) of the VAT Act.

Issue 2: Legality of Show Cause Notice
The writ petitions challenged the initiation of suo motu revision based on show cause notices issued after three years from the original assessment orders. The embargoes set in Section 49(3) of the VAT Act prohibit initiating revision proceedings after three calendar years from the date of the order sought to be revised. The court emphasized that the limitation period starts from the date of the original assessment, not the reassessment order. Citing a Supreme Court decision, it was held that the show cause notices seeking revision of original assessment orders were beyond the prescribed time limit and thus quashed.

Conclusion:
The High Court quashed the show cause notices and the final revisional orders for being barred by limitation. The court held that the notices seeking revision of original assessment orders were issued after the expiry of three calendar years, rendering them illegal. Consequently, all writ appeals and writ petitions were allowed with no order as to costs.

This judgment clarifies the timeline for passing orders under Section 49(3) of the VAT Act and emphasizes the importance of adhering to the prescribed limitation period for initiating suo motu revision proceedings.